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Coalition squabbles over NBS law

If 1997 has been the year of living dangerously for Slovakia's governing coalition, the month of November brought little in the way of relief. Two junior government parties, the Slovak National Party (SNS) and the Association of Slovak Workers (ZRS), openly declared their opposition to both the proposed 1998 state budget and an amendment to the National Bank of Slovakia (NBS) Act that had been approved by their senior coalition partner, the Movement for a Democratic Slovakia (HZDS).
Negotiations are now underway to restore unity to the government, but large questions remain concerning the objections and public pronouncements of the SNS and ZRS - do they represent a fundamental disagreement with the HZDS's economic strategy, or are they just a form of jockeying for political influence in the coalition power structure?

If 1997 has been the year of living dangerously for Slovakia's governing coalition, the month of November brought little in the way of relief. Two junior government parties, the Slovak National Party (SNS) and the Association of Slovak Workers (ZRS), openly declared their opposition to both the proposed 1998 state budget and an amendment to the National Bank of Slovakia (NBS) Act that had been approved by their senior coalition partner, the Movement for a Democratic Slovakia (HZDS).

Negotiations are now underway to restore unity to the government, but large questions remain concerning the objections and public pronouncements of the SNS and ZRS - do they represent a fundamental disagreement with the HZDS's economic strategy, or are they just a form of jockeying for political influence in the coalition power structure?

The HZDS, for its part, is playing down the dispute. "The SNS [representatives] often act like heroes," said Michal Baránik, a HZDS deputy and member of the Parliamentary Finance Committee which reviewed the NBS Act amendment after it had passed first reading in Parliament on November 12. "I think they will think it over and finally understand both [budget and NBS] laws in the proper light."

"The concerns of the SNS are unfounded," seconded Vladimír Hagara, HZDS spokesman and economic strategist. "They are just playing 'big pride' for the voters, but there is no problem in the coalition."

The SNS, meanwhile, insists that its concerns are real. Ignác Prno, economic advisor to the SNS, seemed surprised that HZDS officials would trivialize his party's position. "Did [Baránik] call us heroes too?" he asked. "Well, neither [Baránik nor Hagara] are financial experts. Their statements are misleading. It's not in our interest to destroy or disturb the coalition, nor do we want to create a lot of tension, but we have to be professional and point out the risks [attached to the NBS law]."

According to Prno, the SNS could not agree to changes to the NBS Act that would increase the cabinet's control over the country's monetary policy at the expense of NBS independence. Two proposals - one to include 5 cabinet-appointed members in the 10-member Bank Council, and another to submit the entire NBS budget to parliamentary approval - were particularly unacceptable to the SNS.

"This law was not thought out systematically but proposed as a block, according to the momentary demands of the state budget," Prno explained. "We want to preventÉ fiscal policy from being mixed up with monetary policy."

The NBS amendment was first unanimously approved by cabinet on September 29, and was scheduled to pass quickly through the committee stage in Parliament (the so-called 'second reading') to a third and final reading on November 21. But it never arrived at its final destination.

Following a November 19 meeting between SNS deputies and NBS Governor Vladimír Masár, SNS vice-chairwoman Anna Malíková declared that while her party did not doubt the need for a new NBS law, "we would like to de-politicize the proposed law." "The reason that we are so vehemently against the law is because we don't want the NBS's good name and credit to be tarnished abroad," Prno added.

Baránik responded to SNS pressure by making certain alterations to the amendment during the committee stage. "I was the one who proposed a correction concerning the approval of the NBS budget," he said. "In the proposed law, it was not said exactly that only the administrative budget of current expenditures would be subject to approval by Parliament. That was what I made more precise, so there would be no doubt about which NBS budget should be approved. It was possible to interpret it in two ways before."

"The second change was that the NBS would have to show its balance sheet of debits and assets to the Finance Ministry," Baránik continued. "If the ministry controls commercial banks, it should also have an overview of the situation at the NBS. But really, these changes were only clarifications, not problems in the coalition."

Yet, doubts remain that concern for monetary policy is really at the heart of the SNS's refusal to support the amendment. Media sources have asked why it has taken the SNS almost two months to decide to openly defy the law.

"We were against the law from the moment the cabinet approved it, but we only have two ministers [there], and this is not their field of expertise," Prno explained. "So, we really only fully realized the dangers of the law when it was discussed on a parliamentary level."

SNS representatives have also tried to extinguish speculation about the dispute, saying it is only a disagreement over specifics. "We don't have a problem with the [budget and NBS] laws as such, but we do have our own opinions about certain specific articles in them. And when we can't agree during coalition discussions, these differences spill out into parliament and become visible," seconded Malíková.

The other serious concern raised by the country's media was whether the SNS's defiance has anything to do with the party's dissatisfaction with the funds allocated in the proposed 1998 state budget to the defense and education ministries, both SNS portfolios. Prno denied that, too.

"There is absolutely no connection between our viewpoint on the budget and the NBS law," Prno said. "I believe that the SNS will not be the one who has to vote against the budget. Of course, if our requirements are absolutely turned down, then we will vote against it. But I don't think it will come to absolute refusal, because there has already been some interest expressed [by the HZDS] in finding some kind of compromise."

Malíková was at pains to sound a conciliatory tone too. "I would almost say that [these differences in opinion] show that the coalition is functioning according to democratic principles," she said for the daily SME.

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